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Finance Bill 2013 Includes Pension Changes

The Finance Bill 2013 sets out draft legislation to permit an individual to access his/her additional voluntary contributions (AVCs) prior to retirement. The Bill also proposes to ease access requirements for approved retirement funds (ARFs) for the next 3 years.

Taxand Ireland discovers what these updates will involve.

Early access to AVCs
The Bill provides for a mechanism for an individual to make a once-off withdrawal of up to 30% of the value of his/her AVCs from certain pension arrangements. This option will be available for 3 years from the passing of the Finance Act 2013 (which is expected in April). Any such withdrawal will be subject to income tax at the individual's marginal rate but will be exempt from the USC.

Revision of ARF and AMRF requirements
The Bill provides that an individual under 75 years will be permitted to invest in an ARF where he/she has income of at least EUR12,700 per annum. This will be a significant reduction from the current requirement of EUR18,000 per annum. Furthermore, where an individual under 75 years does not satisfy the EUR12,700 income requirement, he/she will be able to avail of the ARF option where he/she places EUR63,500 in an approved minimum retirement fund (AMRF) rather than EUR119,800 as is currently the case.

Taxand's Take

With the suggested age of retirement ever increasing, access to pension funds will be hot on people's minds. The updates to AVC and ARF access introduced by the Finance Bill will be welcomed, as they provide individuals with more choice. Corporations who contribute to employee pensions should investigate to determine what effect, if any, this will have on their current pension schemes.